Car makers wary of diesel decontrol

The centre’s fresh reiteration to decontrol diesel has put many car makers in a fix as they have gone ahead with increasing diesel vehicle capacities. The lack of clarity in terms of timeframe and extension of decontrol, too bothers them. Manu P Toms reports.

autosUpdated: Apr 25, 2012 23:04 IST

Manu P Toms

Hindustan Times

The centre’s fresh reiteration to decontrol diesel has put many car makers in a fix as they have gone ahead with increasing diesel vehicle capacities. The lack of clarity in terms of timeframe and extension of decontrol, too bothers them.

“We don’t know when this will be implemented,” R C Bhargava, chairman, Maruti Suzuki told HT. “We should be allowed to work in an environment where there is policy certainty. Rules should not be changing everyday.”

Many others, including Maruti Suzuki and Hyundai, are in the process of ramping up their diesel car production following heavy demand. With petrol becoming costlier by R26 than diesel, petrol car sales declined 15% while diesel car sales surged by 35%.

Maruti decided to increase its diesel car production from 240,000 to 400,000 units a year while Hyundai increased the production of diesel variants of i10 and Verna by 50% to 10,500 units per month.

Bhargava, however, welcomed the move to remove fuel subsidy. “Huge shift towards diesel cars will come to an end. There will be a balance between diesel and petrol cars,” he said.

Mahindra & Mahindra, a pure diesel player with its large portfolio of utility vehicle, welcomed the move. “We are all for it,” Pawan Goenka, president, auto and farm equipment sector, M&M told HT.

Some industry officials say even if the diesel price is freed up it will not entirely change the dynamics. “Currently it is 70:30 (where diesel and petrol options are available). It is not going to reverse,” said Neeraj Garg, director, passenger car division, Volkswagen. “We have the flexibility to make necessary changes in production.”